Alphabet’s Google made an unexpected announcement on Friday that it had hired a number of important employees from Windsurf, an AI code creation business, after rival OpenAI had attempted to buy the company.
A person with knowledge of the agreement claims that Google is paying $2.4 billion in license payments in exchange for the right to utilize a portion of Windsurf’s technology on non-exclusive terms. Additionally, the individual stated that Google will not acquire a controlling position or ownership in Windsurf.
Co-founder Douglas Chen, Windsurf CEO Varun Mohan, and a few members of the research and development team for the coding tool will join Google’s DeepMind AI group.
The agreement came after months of negotiations between Windsurf and OpenAI to sell the company for a possible $3 billion. According to people familiar with the situation, Reuters reported in June that the deal demonstrated interest in the code-generation market, which has become one of the fastest-growing AI applications.
A comment from OpenAI was not immediately available.
At Google DeepMind, the former Windsurf team will concentrate on agentic coding projects, mainly the Gemini project.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” Google stated in a statement.
The unique purchase structure is a victory for Windsurf’s backers. According to PitchBook, the company was last valued at $1.25 billion a year ago and has raised $243 million from investors such as Kleiner Perkins, Greenoaks, and General Catalyst.
According to individuals who spoke to Reuters, Windsurf investors would keep their ownership holdings in the business and get liquidity through the license fee.
“ACQUIHIRE” DEALS
Google’s unexpected move is similar to its agreement to hire important staff members from chatbot company Character in August 2024.AI.
Similar responses have been given to these so-called acquihire acquisitions by their big tech peers, Microsoft (MSFT.O), Amazon (AMZN.O), and Meta (META.O), which some have condemned as an attempt to avoid regulatory scrutiny.
Amazon hired the co-founders and some of the employees of the AI firm Adept last June, while Microsoft signed a $650 million deal with Inflection AI in March 2024 to use the AI startup’s algorithms and hire its employees.
In June, Meta made the largest test to far of this growing type of corporate alliances by acquiring a 49% interest in Scale AI.
These transactions do not need to be reviewed by U.S. antitrust authorities, in contrast to acquisitions that would grant the buyer a controlling interest. If they think the deal was set up to circumvent those standards or hurt competition, they could still investigate it. Since then, other transactions have been the focus of regulatory investigations.
In an effort to attract elite people in the competition to lead the next wave of AI, tech titans like Alphabet and Meta are aggressively pursuing high-profile acquisitions and offering multi-million dollar compensation packages.
Jeff Wang, Windsurf’s head of business, has been named the company’s interim CEO. Vice President of Global Sales Graham Moreno will take over as president with immediate effect.
Windsurf, which has stated ambitions to promote innovation for its enterprise clients, will retain most of its around 250 staff.